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Is the Mobile Business Model Nearing an End? What Replaces It?

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There are many reasons to expect a rather massive consolidation in the global telecom industry over the next decade. The cost of networks keeps rising, with every mobile generation. We soon will reach market saturation, when virtually every person who wants to use mobile phone service, for example, already does so.
Essentially, we are reaching a point where customers are spending about as much as they feel appropriate for the set of services now offered (business or consumer).

There are hopefully major new revenue opportunities coming, but we should also expect most mobile operators and fixed operators to need to replace about half their revenue every decade, from now on.

Those are a few of the big changes to come. There are others.
The 5G era is going to be different from all others in the history of telecom, for several reasons. Traditionally, scarcity has been the paramount business constraint.

Bandwidth was scarce and therefore expensive. Regulatory strategies were designed to keep…
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Abundance is Going to be a Scary Thing

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The 5G era is going to be different from all others in the history of telecom, for several reasons. Traditionally, scarcity has been the paramount business constraint.
Bandwidth was scarce and therefore expensive. Regulatory strategies were designed to keep matters that way, using monopoly or oligopoly market structures; expensive licensed spectrum; franchise or other market entry rules.
In the competitive era, where in most countries mobile competition has been the primary expression of competition overall, scarcity has remained a fundamental assumption. In most markets, less than 500 MHz of total spectrum has been available for all mobile operators to use.
Wi-Fi bandwidth helps, but even including all mobile and Wi-Fi bandwidth, less than a gigaHertz generally has been available for terrestrial applications.
All of that is going to change in the 5G era, which has to have mobile executives in many markets worried about the outcome. The reason is that multiple tools--small cells; new m…
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Why So Many are Skeptical about "Moving up the Stack"

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Generally speaking, as much as service provider executives talk about "moving up the stack" to avoid becoming a "dumb pipe," there is justifiable skepticism about whether that is possible, in many settings. History suggests it is hard to do, hard to do well, and almost never has resulted in significant revenue upside.
There are a few salient exceptions--mobile banking in some markets and video entertainment services in a growing number of markets.
But much depends on where a particular actor sits in the value chain, and what part of the industry that actor occupies.
If the core business is undersea capacity, it is easy to see why skepticism about such moves up the stack is worth attempting. When the core business is "pipe," moves "up the stack" are unlikely to be easy, and might actually be dangerous, as it is so far outside the core competence of the providers.
On the other hand, such efforts already have proven most successful for retail suppli…
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M2M Data Networks are REALLY Different

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Some idea of the character of machine-to-machine (sensor) applications can be seen by the typical amount of data that has to be transmitted by sensors. It may remind you of paging systems, should you recall them.

Sigfox says that sending GPS location requires about six bytes, temperature just two bytes. Object status might require only a single byte, the same amount of data consumed to report speed.
That shows just how optimized a low power wide area network is for low power consumption. Where one might think kilobytes are required to report at least some types of information, other simple status updates might take even less than that.
Such networks are optimized for uplink communications only, not duplex. So sensor transmitters can be turned off when not actively uploading data. Also, many sensor apps only require that a particular sensor be turned on for a few seconds a day, says Marc Olivier, Sigfox VP.
IoT networks optimized for mobile networks feature much-higher bandwidths. M2M n…
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Why Telco OTT Partnerships Rarely Succeed

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“Moving up the stack” is about as key a concept in the telecom business as “dumb pipe” likewise is notable. “Up the stack” is a phrase that means an access services company (cable TV, satellite, telco, capacity supplier) moves from being a supplier of “pipe” services (network access and transport) to being an application provider.
In other words, such a firm returns to its roots. Recall that, historically, telcos made their business by providing voice communications. Communications (voice, originally) was the value and the business driver. To do so, telcos had to build networks.
They did not necessarily want to do so, but the product (communications) could not be sold without doing so. The same has been true with most products telcos sell. The product consumers and businesses often buy is some application with value, and the network is required to use those apps.
Broadly speaking this is now true for most consumer and business applications. What matters is the app and the value it prov…
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5G Use Cases: Few to None Involving Voice

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With the caveat that I find “e-book” formats unpleasant and unnecessary, IHS has produced an “e-book” examining 5G use cases. Actually, it is more akin to a slide deck, so if you want a really quick and high level issue of timelines and concepts, that is what you will find.

One point is worth noting, when looking at 5G: it is all about connecting computing devices. Asked whether any serious work really is being done on “voice,” as part of the 5G standards effort, Reza Arefi, Intel director of spectrum strategy, simply says “no.”

Dean Bubley, founder of Disruptive Analysis, also notes that voice was an afterthought when 4G standards were created.

That speaks volumes about the expected use cases and revenue drivers for 5G. source: IHS Markit
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Will 5G Fixed Wireless Be the First Important New 5G Revenue Source?

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Will the first significant 5G “new revenue sources” come from 5G fixed wireless? Many of us believe that will prove to be the case. As 5G new radio (5GNR) is deployed, mobile operators, in some instances, will be able to supply gigabit internet access to customers who in the past could only get such speeds from a fixed network connection.

Assuming tariffs are comparable to fixed network prices, 5G fixed wireless might, for the first time ever, allow mobile operators to cannibalize fixed connections. In other cases, 5GNR might mean some operators with mobile and fixed assets will be able to supply gigabit internet access to consumers in areas where fiber to the home is not financially viable.
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